BENTLEY SYSTEMS INC

Previous wording

•ARR(2) was $1,186,456 as of March 31, 2024, compared to $1,070,955 as of March 31, 2023, representing a constant currency(1) ARR growth rate(2) of 11.0%;

Current wording

•ARR(2) was $1,215,910 as of June 30, 2024, compared to $1,105,914 as of June 30, 2023, representing a constant currency(1) ARR growth rate(2) of 11%;

Previous wording

•Cash flows from operations were $204,969 for the three months ended March 31, 2024, compared to $176,223 for the three months ended March 31, 2023.

Current wording

•Cash flows from operations were $267,555 for the six months ended June 30, 2024, compared to $256,819 for the six months ended June 30, 2023.

Previous wording

The increase in total revenues for the three months ended March 31, 2024 was primarily driven by an increase in subscriptions revenues, partially offset by a decrease in services revenues.

Current wording

The increase in total revenues for the three and six months ended June 30, 2024 was driven by an increase in subscriptions revenues, partially offset by a decrease in services revenues, and to a lesser extent, a decrease in perpetual licenses revenues.

Previous wording

Subscriptions. For the three months ended March 31, 2024, the increase in subscriptions revenues was primarily driven by improvements in our business performance of approximately $29,244 ($28,625 on a constant currency basis). Our business performance excludes the impact of our platform acquisitions and includes the impact from programmatic acquisitions, which generally are immaterial, individually and in the aggregate.

Current wording

Subscriptions. For the three and six months ended June 30, 2024, the increase in subscriptions revenues was driven by improvements in our business performance of $38,201 ($39,609 on a constant currency basis) and $67,445 ($68,234 on a constant currency basis), respectively. Our business performance excludes the impact of our platform acquisitions and includes the impact from programmatic acquisitions, which generally are immaterial, individually and in the aggregate.

Previous wording

For the three months ended March 31, 2024, the improvements in business performance were primarily driven by expansion from accounts with revenues in the same period in the prior year (“existing accounts”), and growth of 4% attributable to new accounts, most notably small- and medium-sized accounts. Improvements in business performance for the three months ended March 31, 2024 were led by our engineering applications, geoprofessional applications, and our Bentley Infrastructure Cloud for project delivery.

Current wording

For the three and six months ended June 30, 2024, the improvements in business performance were primarily driven by expansion from accounts with revenues in the same period in the prior year (“existing accounts”), and growth of 3% attributable to new accounts, most notably small- and medium-sized accounts. Improvements in business performance for the three and six months ended June 30, 2024 were led by our engineering applications, geoprofessional applications, and our Bentley Infrastructure Cloud for project delivery.

Previous wording

Services. For the three months ended March 31, 2024, the decrease in services revenues was driven by decline in our business performance of approximately $5,857 ($6,064 on a constant currency basis), driven primarily from weakness in Maximo-related work within our digital integrator, Cohesive.

Current wording

Services. For the three and six months ended June 30, 2024, the decrease in services revenues was driven by a decline in our business performance of $3,758 ($3,681 on a constant currency basis) and $9,615 ($9,745 on a constant currency basis), respectively, driven primarily from weakness in Maximo-related work within our digital integrator, Cohesive.

Previous wording

Americas. For the three months ended March 31, 2024, the increase in revenues from the Americas was primarily driven by improvements in our business performance of approximately $15,848 ($15,477 on a constant currency basis).

Current wording

Americas. For the three and six months ended June 30, 2024, the increase in revenues from the Americas was primarily driven by improvements in our business performance of $17,474 ($18,012 on a constant currency basis) and $33,322 ($33,489 on a constant currency basis), respectively.

Previous wording

The improvements in business performance for the three months ended March 31, 2024 were primarily due to expansion of our subscriptions revenues from existing accounts in the U.S.

Current wording

The improvements in business performance for the three and six months ended June 30, 2024 were primarily due to expansion of our subscriptions revenues from existing accounts in the U.S, partially offset by a decline in services revenues.

Previous wording

EMEA. For the three months ended March 31, 2024, the increase in revenues from EMEA was primarily driven by improvements in our business performance of approximately $1,882 ($427 on a constant currency basis).

Current wording

EMEA. For the three and six months ended June 30, 2024, the increase in revenues from EMEA was primarily driven by improvements in our business performance of $12,421 ($12,631 on a constant currency basis) and $14,303 ($13,058 on a constant currency basis), respectively.

Previous wording

The improvements in business performance for the three months ended March 31, 2024 were primarily due to expansion of our subscriptions revenues from existing accounts in the Middle East and Africa, and Central Europe, partially offset by a decline in services revenues in EMEA.

Current wording

The improvements in business performance for the six months ended June 30, 2024 were primarily due to expansion of our subscriptions revenues from existing accounts in the U.K., the Middle East, and Central Europe, partially offset by a decline in services revenues.

Previous wording

APAC. For the three months ended March 31, 2024, the increase in revenues from APAC was primarily driven by improvements in our business performance of approximately $5,622 ($6,730 on a constant currency basis).

Current wording

APAC. For the three and six months ended June 30, 2024, the increase in revenues from APAC was primarily driven by improvements in our business performance of $3,693 ($4,570 on a constant currency basis) and $9,315 ($11,300 on a constant currency basis), respectively.

Previous wording

The improvements in business performance for the three months ended March 31, 2024 were primarily due to expansion of our subscriptions revenues from existing accounts in Australia and India, partially offset by declines in China.

Current wording

The improvements in business performance for the three and six months ended June 30, 2024 were primarily due to expansion of our subscriptions revenues from existing accounts in Australia, India, and Southeast Asia, partially offset by declines of our subscriptions revenues from existing accounts in China.

Previous wording

Total revenues in China for the three months ended March 31, 2024 decreased as compared to the same period in the prior year, primarily due to a decline in subscriptions revenues from existing accounts, partially offset by the expansion of our perpetual licenses revenues. The future results in China remain uncertain as a result of continued geopolitical challenges, the obstacles there to cloud‑deployed software, and the financial timing impact of the preference there for license sales, rather than subscriptions.

Current wording

Total revenues in China for the three and six months ended June 30, 2024 decreased as compared to the same period in the prior year, primarily due to a decline in subscriptions revenues, partially offset by the expansion of our perpetual licenses revenues. The future results in China remain uncertain as a result of continued geopolitical challenges, the obstacles there to cloud‑deployed software, and the financial timing impact of the preference there for license sales, rather than subscriptions.

Previous wording

Cost of subscriptions and licenses. For the three months ended March 31, 2024, on a constant currency basis, cost of subscriptions and licenses decreased primarily due to a decrease in channel partner compensation of approximately $840 and a decrease in amortization of capitalized costs under our Accelerated Commercial Development Program of approximately $780, partially offset by increases in cloud-related costs of approximately $1,077.

Current wording

Cost of subscriptions and licenses. For the three months ended June 30, 2024, on a constant currency basis, cost of subscriptions and licenses increased primarily due to an increase in cloud‑related costs of $2,286, partially offset by a decrease in headcount‑related costs of $830, mainly due to a decrease in stock‑based compensation expense, partially offset by realignment expenses related to the 2023 Program.

Previous wording

Cost of services. For the three months ended March 31, 2024, on a constant currency basis, cost of services decreased primarily due to a decrease in headcount‑related costs of approximately $4,995, mainly due to a reduction in third‑party personnel costs, and to a lesser extent, lower acquisition-related retention incentives.

Current wording

Cost of services. For the three and six months ended June 30, 2024, on a constant currency basis, cost of services decreased primarily due to a decrease in headcount‑related costs of $4,439 and $9,434, respectively, mainly due to a reduction in third‑party personnel costs.

Previous wording

Selling and marketing. For the three months ended March 31, 2024, on a constant currency basis, selling and marketing expenses increased primarily due to an increase in headcount‑related costs of approximately $3,394, mainly due to an increase in annual and other compensation costs, partially offset by a decrease in promotional costs of $1,344.

Current wording

For the six months ended June 30, 2024, on a constant currency basis, selling and marketing expenses increased primarily due to an increase in headcount‑related costs of $6,364, mainly due to an increase in annual and other compensation costs, and an increase in third‑party personnel costs.

Previous wording

General and administrative. For the three months ended March 31, 2024, on a constant currency basis, general and administrative expenses decreased primarily due to lower acquisition costs of approximately $4,986. Partially offsetting this decrease was an increase in headcount‑related costs of approximately $962, mainly due to an increase in stock‑based compensation expense, and to a lesser extent, third‑party personnel costs. The three months ended March 31, 2023 included approximately $1,799 of income recorded due to the continued wind down of our Russian entities since we exited operations beginning in the second quarter of 2022.

Current wording

For the six months ended June 30, 2024, on a constant currency basis, general and administrative expenses increased primarily due to an increase in headcount‑related costs of $6,884, mainly due to an increase in stock‑based compensation expense, and to a lesser extent, an increase in annual and other compensation costs, as well as increased expense associated with non‑income related taxes of $4,317. Additionally, during the six months ended June 30, 2024, we recognized approximately $3,500 of costs associated with our internal‑use system implementations, as well as approximately $2,200 of other corporate initiatives expenses. Partially offsetting these increases were lower acquisition costs of $4,964 and income of $1,940 recorded during the six months ended June 30, 2023 due to the continued wind down of our Russian entities since we exited operations beginning in the second quarter of 2022.

Previous wording

Deferred compensation plan. For the three months ended March 31, 2024 and 2023, deferred compensation plan expense was attributable to the marked to market impact on deferred compensation plan liability balances period over period.

Current wording

Deferred compensation plan. For the three and six months ended June 30, 2024 and 2023, deferred compensation plan expense was attributable to the marked to market impact on deferred compensation plan liability balances period over period.

Previous wording

Amortization of purchased intangibles. For the three months ended March 31, 2024, on a constant currency basis, amortization of purchased intangibles decreased primarily due to previously acquired intangible assets that continue to become fully amortized and lower acquisition activity as compared to prior periods.

Current wording

Amortization of purchased intangibles. For the three and six months ended June 30, 2024, on a constant currency basis, amortization of purchased intangibles decreased primarily due to previously acquired intangible assets that continue to become fully amortized and lower acquisition activity as compared to prior periods.

Previous wording

For the three months ended March 31, 2024, interest expense, net decreased primarily due to lower weighted average debt outstanding, as compared to the same period in the prior year, primarily related to the pay down of our revolving loan borrowings under the Credit Facility in January 2024.

Current wording

For the three and six months ended June 30, 2024, interest expense, net decreased primarily due to lower weighted average debt outstanding, as compared to the same period in the prior year, primarily related to the pay down of our revolving loan borrowings under the Credit Facility in January 2024.

Previous wording

(1)Foreign exchange gain is primarily attributable to foreign currency translation derived mainly from U.S. dollar denominated cash and cash equivalents, account receivables, customer deposits, and intercompany balances held by foreign subsidiaries. Intercompany finance transactions primarily denominated in U.S. dollars resulted in unrealized foreign exchange (losses) gains of $(394) and $861 for the three months ended March 31, 2024 and 2023, respectively.

Current wording

(1)Foreign exchange (loss) gain is primarily attributable to foreign currency translation derived mainly from U.S. dollar denominated cash and cash equivalents, account receivables, customer deposits, and intercompany balances held by foreign subsidiaries. Intercompany finance transactions primarily denominated in U.S. dollars resulted in unrealized foreign exchange (losses) gains of $(37) and $1,397 for the three months ended June 30, 2024 and 2023, respectively, and $(431) and $2,258 for the six months ended June 30, 2024 and 2023, respectively.

Previous wording

For the three months ended March 31, 2024, the effective tax rate was higher compared to the same period in the prior year primarily due to the decrease in discrete tax benefits recognized in the current year period. For the three months ended March 31, 2024 and 2023, we recorded discrete tax benefits of $2,138 and $7,073, respectively, primarily associated with windfall tax benefits from stock‑based compensation, net of the impact from officer compensation limitation provisions.

Current wording

For the three and six months ended June 30, 2024, the effective tax rate was higher compared to the same period in the prior year primarily due to the impact of the decrease in discrete tax benefits recognized in the current year period. For the three months ended June 30, 2024 and 2023, we recorded discrete tax benefits of $18,543 and $20,394, respectively, and $20,681 and $27,467 for the six months ended June 30, 2024 and 2023, respectively, primarily associated with windfall tax benefits from stock‑based compensation, net of the impact from officer compensation limitation provisions.

Previous wording

ARR resulting from the annualization of recurring contracts with consumption measurement durations of less than one year, as a percentage of total ARR, was 48% and 44% as of March 31, 2024 and 2023, respectively, with our E365 subscription offering representing 42% and 36% of total ARR as of March 31, 2024 and 2023, respectively.

Current wording

ARR resulting from the annualization of recurring contracts with consumption measurement durations of less than one year, as a percentage of total ARR, was 49% and 45% as of June 30, 2024 and 2023, respectively, with our E365 subscription offering representing 43% and 38% of total ARR as of June 30, 2024 and 2023, respectively.

Previous wording

The last twelve‑months recurring revenues for the periods ended March 31, 2024 compared to the last twelve‑months of the comparative twelve‑month period increased by $111,444. This increase was primarily due to growth in ARR, which is primarily the result of growing our recurring revenues within our existing accounts as expressed in our recurring revenues dollar‑based net retention rate, as well as additional recurring revenues resulting from new accounts and acquisitions. For the twelve months ended March 31, 2024 and 2023, 90% and 89%, respectively, of our revenues were recurring revenues.

Current wording

The last twelve‑months recurring revenues for the periods ended June 30, 2024 compared to the last twelve‑months of the comparative twelve‑month period increased by $120,908. This increase was primarily due to growth in ARR, which is primarily the result of growing our recurring revenues within our existing accounts as expressed in our recurring revenues dollar‑based net retention rate, as well as additional recurring revenues resulting from new accounts and acquisitions. For the twelve months ended June 30, 2024 and 2023, 90% and 89%, respectively, of our revenues were recurring revenues.

Previous wording

(4)Realignment expenses (income). We exclude these charges and subsequent adjustments to our estimates when we evaluate our continuing operational performance because they are not reflective of our ongoing business and results of operations. We believe it is useful for investors to understand the effects of these items on our total operating expenses. For the three months ended March 31, 2024, Realignment expenses were primarily associated with the 2023 Program (see Note 21 to our consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10‑Q). For the three months ended March 31, 2023, Realignment income was associated with the continued wind down of our Russian entities since we exited operations beginning in the second quarter of 2022.

Current wording

(4)Realignment expenses (income). We exclude these charges and subsequent adjustments to our estimates when we evaluate our continuing operational performance because they are not reflective of our ongoing business and results of operations. We believe it is useful for investors to understand the effects of these items on our total operating expenses. For the three and six months ended June 30, 2024, Realignment expenses were primarily associated with the 2023 Program. For the three and six months ended June 30, 2023, Realignment expenses (income) was associated with the continued wind down of our Russian entities since we exited operations beginning in the second quarter of 2022.

Previous wording

For the three months ended March 31, 2024, compared to the same period in the prior year, net cash provided by operating activities was higher by $28,746 due to an increase in net income of $24,820 and a net increase in non‑cash adjustments of $5,104, partially offset by a decrease in net cash flows from the change in operating assets and liabilities of $1,178. The decrease in cash flows from the change in operating assets and liabilities was primarily due to a decrease in deferred revenues, an increase in other current assets, and the overall timing of tax payments period over period. Offsetting theses decreases were higher CSS deposits period over period.

Current wording

For the six months ended June 30, 2024, compared to the same period in the prior year, net cash provided by operating activities was higher by $10,736 due to an increase in net income of $48,181 and a net increase in non‑cash adjustments of $30,075, partially offset by a decrease in net cash flows from the change in operating assets and liabilities of $67,520. The decrease in cash flows from the change in operating assets and liabilities was primarily due to the timing of collections on our receivables, the overall timing of tax payments period over period, and a decrease in deferred revenues.

Previous wording

Net cash used in investing activities was lower by $16,912 for the three months ended March 31, 2024, compared to the same period in the prior year, primarily due to lower acquisition related payments of $10,299, as no acquisitions were completed in the first quarter of 2024 compared to one acquisition in the first quarter of 2023, and to a lesser extent, lower purchases of investments of $5,928.

Current wording

Net cash used in investing activities was lower by $18,806 for the six months ended June 30, 2024, compared to the same period in the prior year, primarily due to lower purchases of investments of $7,643, lower acquisition related payments of $5,299, and lower purchases of property and equipment and investment in capitalized software of $4,564.

Previous wording

Net cash used in financing activities was lower by $7,806 for the three months ended March 31, 2024, compared to the same period in the prior year, primarily due to lower net paydowns of the Credit Facility of $12,707, partially offset by higher dividend payments of $3,349, primarily due to an increase in our quarterly dividend per share to $0.06 from $0.05, and higher payments for shares acquired of $2,157, including shares repurchased under the Repurchase Program. Refer to the section titled “Stock Repurchases” below for further detail.

Current wording

Net cash used in financing activities was higher by $55,023 for the six months ended June 30, 2024, compared to the same period in the prior year, primarily due to higher net paydowns of the Credit Facility of $50,176, including higher repayments of our term loan borrowings, and higher dividend payments of $6,627, primarily due to an increase in our quarterly dividend per share to $0.06 in 2024 from $0.05 in 2023. Refer to the sections titled “Long‑Term Debt” and “Stock Repurchases” below for further details.

Previous wording

As of March 31, 2024, we had $849,850 available under the Credit Facility. We were in compliance with all covenants in its Credit Facility, the 2026 Notes, and the 2027 Notes as of March 31, 2024. Any failure to comply with such covenants under the Credit Facility would prevent us from being able to borrow additional funds under the Credit Facility, and, as with any failure to comply with such covenants under the 2026 Notes and the 2027 Notes, could constitute a default that may cause all amounts outstanding to become due and immediately payable in full.

Current wording

As of June 30, 2024, we had $849,850 available under the Credit Facility. During the three months ended June 30, 2024, we made repayments of $102,500 on the senior secured term loan under the Credit Facility. Under the terms of the senior secured term loan, repayments are applied to unpaid quarterly principal installments. There are no remaining required principal installments on the senior secured term loan through the maturity date of November 15, 2025. We were in compliance with all covenants in its Credit Facility, the 2026 Notes, and the 2027 Notes as of June 30, 2024. Any failure to comply with such covenants under the Credit Facility would prevent us from being able to borrow additional funds under the Credit Facility, and, as with any failure to comply with such covenants under the 2026 Notes and the 2027 Notes, could constitute a default that may cause all amounts outstanding to become due and immediately payable in full.

Previous wording

Our Board of Directors has authorized us to repurchase up to $200,000 of our Class B common stock and/or outstanding convertible senior notes through June 30, 2024 under the Repurchase Program. Effective July 1, 2024, our Board of Directors extended the Repurchase Program, authorizing us to repurchase from such date up to $200,000 of our Class B common stock and/or convertible senior notes through June 30, 2026. Our current authorization under the Repurchase Program expires on June 30, 2024. We may use available working capital and cash provided by operations to make repurchases.

Current wording

Our Board of Directors has authorized us to repurchase up to $200,000 of our Class B common stock and/or outstanding convertible senior notes through June 30, 2024 under the Repurchase Program. This authorization under the Repurchase Program expired on June 30, 2024. In March 2024, our Board of Directors approved an extension to the Repurchase Program authorizing us to repurchase up to $200,000 of our Class B common stock and/or convertible senior notes from June 30, 2024 through June 30, 2026. We may use available working capital and cash provided by operations to make repurchases.

Previous wording

During the three months ended March 31, 2024, we repurchased 302,598 shares for $15,006 under the Repurchase Program. For the three months ended March 31, 2023, we did not repurchase shares under the Repurchase Program.

Current wording

During the six months ended June 30, 2024, we repurchased 729,681 shares for $37,515 under the Repurchase Program. For the six months ended June 30, 2023, we did not repurchase shares under the Repurchase Program.

Previous wording

We have the right to require that certain equity awardees receive gross or net quantities of shares of our Class B common stock, including distributions from the DCP and share issuances under our Bonus Plan. In the case of a gross issuance or distribution, an awardee is required to reimburse promptly to us the cash required for his or her tax withholding amounts. Conversely, under a net issuance or distribution, shares are withheld in consideration of remitting withholding taxes on behalf of an equity awardee, thereby requiring us to remit cash for the tax withholdings. During the three months ended March 31, 2024, we exercised our right to require that impacted equity awardees receive gross quantities of our Class B common stock during the first quarter. During the three months ended March 31, 2023, we allowed impacted awardees the option to receive net quantities of shares of our Class B common stock in the first quarter. We will continue to evaluate whether share awards will be required to be received by awardees on a gross basis, or if net settlement may be elected by awardees.

Current wording

We have the right to require that certain equity awardees receive gross or net quantities of shares of our Class B common stock, including distributions from the DCP and share issuances under our Bonus Plan. In the case of a gross issuance or distribution, an awardee is required to reimburse promptly to us the cash required for his or her tax withholding amounts. Conversely, under a net issuance or distribution, shares are withheld in consideration of remitting withholding taxes on behalf of an equity awardee, thereby requiring us to remit cash for the tax withholdings. During the six months ended June 30, 2024, we exercised our right to require that impacted equity awardees receive gross quantities of our Class B common stock. During the six months ended June 30, 2023, we allowed impacted awardees the option to receive net quantities of shares of our Class B common stock. We will continue to evaluate whether share awards will be required to be received by awardees on a gross basis, or if net settlement may be elected by awardees.

Previous wording

The declaration and payment of dividends is within the discretion of our Board of Directors. We paid quarterly dividends of $0.06 per share of common stock during the three months ended March 31, 2024 and $0.05 per share of common stock during the three months ended March 31, 2023. While we intend to continue paying quarterly dividends, any future determination will be subject to the discretion of our Board of Directors and will be dependent on a number of factors, including our results of operations, capital requirements, restrictions under Delaware law, and overall financial condition, as well as any other factors our Board of Directors considers relevant. In addition, the terms of the agreement governing the Credit Facility limit the amount of dividends we can pay.

Current wording

The declaration and payment of dividends is within the discretion of our Board of Directors. We paid quarterly dividends of $0.06 per share of common stock during the six months ended June 30, 2024 and $0.05 per share of common stock during the six months ended June 30, 2023. While we intend to continue paying quarterly dividends, any future determination will be subject to the discretion of our Board of Directors and will be dependent on a number of factors, including our results of operations, capital requirements, restrictions under Delaware law, and overall financial condition, as well as any other factors our Board of Directors considers relevant. In addition, the terms of the agreement governing the Credit Facility limit the amount of dividends we can pay.